Yokohama to invest Rs 500 cr in 5 years; expansion begins early next year

The company currently has a production capacity of 7 lakh unit for making passenger vehicle tyres a year, out of which 80 percent is utilised currently.Nabeel A Khan | ETAuto | Updated: January 18, 2016, 17:57 IST

NEW DELHI: Almost a year in India, Japanese tyre manufacturer Yokohama is planning its next round of expansion, at its Bahadurgarh plant in Haryana.

The Japanese tyre maker had invested Rs 300 crore in the plant last year, and will decide soon on the amount of investment by December.

"We will decide on the scale of expansion by the end of this year, said Satoshi Fujitsu, President & Director, of Yokohama in an interview to ETAuto.

Fujitsu, reckoned that they could "at least double" its existing capacity at Ballabhgarh.

The company currently has a production capacity of 7 lakh unit for making passenger vehicle tyres a year, out of which 80 percent is utilised currently.

The company produces 5.5 lakh units in this plant and imports about one lakh units for high-end SUVs.

Yokohama's sales increased 45 percent over the previous year. The tyre maker sold 4.2 lakh units last year, and expects to sell over 6.5 lakh units of tyres this year.

In the long term, the tyre maker expects to invest 10 billion yen (around Rs 500 crore) to take its total capacity to 3 million units a year by 2020.

However, the company has no plans to venture into any new segment and will continue to operate in the passenger vehicle segment.

Yokohama currently has less than one percent market share in the replacement market, and is yet to open its account in the OEM space. It plans to enter the OEM segment soon.

"We are already talking to our Japanese carmakers like Toyota, Honda and others to get the OEM business," Satoshi Fujitsu said.

Yokohama supplies to the local unit of Toyota by importing from Japan but now they are working towards fulfilling Toyota's requirement in India . Fujitsu says that once they reach the peak production, OEM will contribute 30 percent of the total business.

The tyre manufacturer has 20% local content at present and is expected to increase it to 90 percent, in the next four-five years. "With greater localisation and higher volume we expect the manufacturing cost to come down by 20 percent," said Fujitsu.

Prices of most SUVs were cut between Rs 1.1 lakh and Rs 3 lakh following the implementation of GST, which subsumed over a dozen central and state levies like excise duty, service tax, and VAT from July 1.